Four coins, four privacy models. What a stranger watching the ledger can read off each one.
| Coin | By default | What a chain observer sees | Bottom line |
|---|---|---|---|
| Monero | Shielded1 | Nothing — sender, receiver, and amount are hidden on every transaction. | Privacy is mandatory at the protocol level; there’s no transparent mode to slip into. |
| Bitcoin | Transparent2 | Every amount and address, permanently — unless you add CoinJoin or coin control. | Public by default; privacy is possible, but manual and partial. |
| Lightning | Off-chain3 | The channel you open and close, not the payments in between. | Bitcoin’s payment layer — strong payment privacy, but funding is public and routing leaks metadata. |
| Ethereum | Transparent4 | Every transaction, balance, and address link, permanently. | Account-based and fully public; no mainstream shielding or mixing. |
Custody decides more than the coin does
We put 39 custodial platforms — exchanges, brokers, payment apps, Bitcoin kiosks, spot ETFs — through the same questions we ask banks. Every U.S. service gave the same three answers, which is why this page no longer ranks them against each other.
Custodial: the answers are federal, not corporate
Identity verification before you can trade. The company holding your coins can freeze or seize them. Your sales are reported to the IRS on Form 1099-DA. Coinbase and Kraken are not different products here — the same rules bind both. There is nothing to shop between.
Self-custody removes all three, and moves the risk
No checkpoint, no company able to freeze it, no broker filing for you. Two things that does not mean. It is not tax invisibility — taxable events stay reportable by you. And your wallet still talks to somebody’s server by default, which can log your IP address next to your addresses. Identity can leak without your keys ever moving: Ledger’s 2020 breach exposed roughly a million emails and about 272,000 names, postal addresses, and phone numbers.
One identity link is permanent
Once a checkpoint ties a person to an address, that link can be followed across a public ledger indefinitely — and chain-analysis firms sell exactly that tracing to the IRS, FBI, DEA, and ICE. Coinbase sold its own analytics product to ICE under a contract worth up to about $1.36 million, including historical geo-tracking data; the company says it reads only public chain data, not customer accounts.
Where the coins came from beats which wallet holds them
Every custodial route starts with an identity checkpoint. Peer-to-peer venues don’t — and that is close to the only place left where picking one service over another still changes the answer.
Which wallet to install is a software question
Build reproducibility, telemetry defaults, and whether you can point a wallet at your own node are all worth checking — and they move faster than a student club can follow. The Wasabi CoinJoin coordinator shut down in June 2024 and Trezor Suite dropped mixing entirely. Most large exchanges delisted Monero across 2024–2025. A per-wallet table written today would be wrong by spring, so we don’t keep one. These two do, and keep it current:
Privacy GuidesMaintained, readable write-ups on wallets and privacy coins.
WalletScrutinyVerifies whether the app you install matches the code they published.
Our own starting pick for private payments is on the tools page. Holding privacy tools and privacy coins is legal; nothing here is legal, financial, or tax advice.
Every claim on this page links straight to its primary source — a regulator’s own page, a company’s own statement, or original reporting. Last reviewed July 12, 2026; rules and listings change, so check current details before relying on any of it.
Notes on the four coins4 sources
- Monero — how it works (project docs). Monero hides sender, receiver, and amount by default using ring signatures, stealth addresses, and RingCT, which is why analytics firms treat privacy coins as far harder to trace than transparent chains. Monero project docs
- Bitcoin — a permanently public ledger. Bitcoin records every transfer on a chain of digital signatures that any observer can read and keep forever; there is no shielded mode, so amounts and address links stay visible unless a user adds CoinJoin or coin control on top. This is what makes the chain-analysis industry possible. Bitcoin white paper (PDF)
- Lightning — on-chain footprint and routing metadata. Lightning moves payments off-chain, but opening and closing a channel are ordinary Bitcoin transactions recorded on-chain, and channels are announced to the network, so their funding UTXOs are identifiable; payment routing is onion-encrypted, yet node metadata — and a node’s IP address, without Tor — can still leak. Lightning privacy notes (t-bast)
- Ethereum — account-based and fully public (project docs). Ethereum tracks balances per account rather than per coin, and the project’s own documentation notes that funds always sit on Ethereum’s ledger and that anyone can verify the sender of a transaction. Every transfer, balance, and link between addresses is therefore permanently readable, and Ethereum ships no mainstream shielding or mixing of its own. Ethereum docs — Accounts
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